Iran war is ruining Saudi Arabia’s plans to attract investment and visitors

Attacks renew Saudi-Houthi conflict

Saudi Arabia retaliated with missile strikes on Yemen, including attacks on oil facilities, and the Houthis responded with further strikes on Saudi oil infrastructure. The fighting revives a conflict that had been paused after a 2022 ceasefire.

How the Houthis gained strength

The Houthis began as a local insurgency in Yemen and took control of large parts of the country from 2014 onward. They now control most of Yemen’s population centers, according to Gregg Carlstrom, The Economist’s Middle East correspondent.

Carlstrom said Iran has supplied the group with weapons, funding, expertise and technical support. The Houthis have used that backing to build an arsenal of drones and missiles, which they are now using against Saudi Arabia.

Economic goals face new strain

The Houthis describe their airport attacks as retaliation for the Saudi-led coalition’s intervention in Yemen and restrictions on Yemeni airspace, Carlstrom said. He added that disrupting a capital’s airport can also inflict economic damage by limiting travel and cargo deliveries.

The attacks threaten Saudi Arabia’s ambitions to become a destination for investment, travel and tourism. The kingdom’s upcoming Future Investment Initiative was postponed until 2027, while the broader conflict also has implications for the United States, Israel and global energy markets.